Responsible Investment in Sustainable Forestry How do asset managers develop and execute RI strategies for timberland? Radha Kuppalli Director, Investor Services New Forests Pty Ltd rkuppalli@newforests.com.au RI Europe 2013 London, June 2013
Important Note New Forests 2013. This presentation is the property of New Forests, and this material may not be reproduced or used in any form or medium without express written permission. The information contained in this presentation is of a general nature and is intended for discussion purposes only. The information does not constitute financial product advice or provide a recommendation to enter into any investment. This presentation has been prepared without taking account of any person s objectives, financial situation or needs. This is not an offer to buy or sell, nor a solicitation of an offer to buy or sell any security or other financial instrument. Past performance is not a guide to future performance. Past performance is not a reliable indicator of future performance. You should consider obtaining independent professional advice before making any financial decisions. The terms set forth herein are based on information obtained from sources that New Forests believes to be reliable, but New Forests makes no representations as to, and accepts no responsibility or liability for, the accuracy, reliability or completeness of the information. Except insofar as liability under any statute cannot be excluded, New Forests, including all companies within the New Forests group, and all directors, employees and consultants, do not accept any liability for any loss or damage (whether direct, indirect, consequential or otherwise) arising from the use of this presentation. The information contained in this publication may include financial and business projections that are based on a large number of assumptions, any of which could prove to be significantly incorrect. New Forests notes that all projections, valuations, and statistical analyses are subjective illustrations based on one or more among many alternative methodologies that may produce different results. Projections, valuations, and statistical analyses included herein should not be viewed as facts, predictions or the only possible outcome. Before considering any investment, potential investors should conduct such enquiries and investigations as the investor deems necessary and consult with its own legal, accounting and tax advisors in order to make an independent determination of the suitability, risk and merits of any investment. New Forests Advisory Pty Limited (ACN 114 545 274) is the holder of AFSL No 301556. New Forests Asset Management Pty Limited (ACN 114 545 283) is registered with the Australian Securities and Investments Commission and is an Authorised Representative of New Forests Advisory Pty Limited (ACN 114 545 274, AFSL 301556). New Forests Inc. has filed as an exempt reporting adviser with the Securities and Exchange Commission. Slide 2
Institutional Investment in Forestry Million Acres 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Institutional capital in timberland is growing with room to grow and increasing international and emerging markets focus 16 14 12 10 8 Institutional Timberland Investment by Area Global Area Investible Universe $Bn* - Approximately $160 billion South Africa $3 SE Asia $5 Canada $7 Australia $7 6 New Zealand $8 4 2 0 Other Latin America $20 Brazil $35 United States $75 *Source: HNRG and New Forests estimates, does not include Europe Let s take forest certification (e.g. FSC) as a given and go beyond certification. What else can timber investors do to ensure responsible investment? Slide 3
Australia Landscape of Renewable Resource Investing at scale enables both property and landscape-level outcomes Plantation eucalypts have steadily replaced native woodchip exports to Asia Australian softwood services domestic housing industry with low carbon building materials Slide 4
Asia ESG from DD to Management Land encroachment squatter s oil palm nursery Addressing land tenure & claims Worker health & safety Due Diligence Approach -Specialist land tenure analysis -Biodiversity and HCV study (greenfield) -Gap analysis of FSC and IFC Performance Standards -Develop Certification Action Plan Temporary contract workers camp Management Approach -Pursue FSC and IFC Performance Standards -Transparency and reporting to investors -Social & Environmental Management System with annual internal audit process Slide 5 Plantation logs for R&D trial Long-term workers camp Contractor management & training
US Regulatory Environmental Markets Wetlands, stream, & species banking Pineywoods Mitigation bank, in East Texas is the second largest wetlands and stream mitigation bank in the United States (19,000 acres), servicing oil and gas, highways and reservoir development. Forest carbon for California cap-and-trade market Forest Carbon Partners fund finances carbon project development on non-industrial forests, including family forests and Native American tribal lands. Total sales of mitigation credits from banks and other sources estimated at $2.0-3.4 billion annually.* The total value of the California carbon market is expected to range from $3-8 billion through 2020. Slide 6 *Ecosystem Marketplace, 2010. State of Biodiversity Markets.
www.newforests.com.au